The venture capital firms were chosen in response to a 1984 law requiring state pension funds to invest in venture capital projects.

Under the law, the state employees pension fund and the Public School Employees Retirement Fund can use up to 1 percent of their reserves for venture capital investments.

In a news release announcing the selection of NEPA Venture Fund and the other funds, William J. Moran, chairman of the state employees fund's board of directors, said that the funds "will seek investments in new products or processes which hold the promise of expanding or diversifying the state's economy and creating new employment."

John Brosius, executive director of the state employees retirement fund, said the venture capital investments may not all pan out, but on the whole, their returns are higher than investments in the stock and bond markets.

Brosius said the five firms selected were recruited by an advertisement placed in The Pennsylvania Bulletin.

The Easton-based firm, he said, is headed by Frederick Best III. In its application it said that at least 90 percent of its investments would be in companies based in northeastern Pennsylvania.

In addition to the Easton firm, the board designated $10 million to Fostin Capital Corp., of Pittsburgh; $9 million to TDH II Limited, of King of Prussia; $5 million to Butcher and Singer/Keystone Venture Fund, of Philadelphia; and $5 million to PNC Venture Management Co., of Pittsburgh.